-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IMYXZEQLpzu0DQpane5Kz4cl4Xc926UAOA5hxizhIl370jpkHP8Vx57l2O6Vto+N aqW9HUKDUoivsTfrBodpRQ== 0001005150-97-000228.txt : 19970403 0001005150-97-000228.hdr.sgml : 19970403 ACCESSION NUMBER: 0001005150-97-000228 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19970402 EFFECTIVENESS DATE: 19970402 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEALTHSOUTH CORP CENTRAL INDEX KEY: 0000785161 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SPECIALTY OUTPATIENT FACILITIES, NEC [8093] IRS NUMBER: 630860407 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-24429 FILM NUMBER: 97573807 BUSINESS ADDRESS: STREET 1: TWO PERIMETER PARK S STREET 2: STE 224W CITY: BIRMINGHAM STATE: AL ZIP: 35243 BUSINESS PHONE: 2059677116 MAIL ADDRESS: STREET 1: TWO PERIMETER PARK SOUTH CITY: BIRMINGHAM STATE: AL ZIP: 35243 FORMER COMPANY: FORMER CONFORMED NAME: HEALTHSOUTH REHABILITATION CORP DATE OF NAME CHANGE: 19920703 S-8 1 FORM S-8 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- FORM S-8 Registration Statement Under The Securities Act of 1933 ---------- HEALTHSOUTH Corporation (Exact Name of Registrant as Specified in its Charter) ---------- Delaware 63-0860407 (State or Other Jurisdiction (I.R.S. Employer Identification Number) of Incorporation or Organization) One HealthSouth Parkway, Birmingham, Alabama 35243 (Address of Principal Executive Offices) (Zip Code) HEALTH IMAGES, INC. NON-QUALIFIED STOCK OPTION PLAN AMENDED AND RESTATED EMPLOYEE INCENTIVE STOCK OPTION PLAN HEALTH IMAGES, INC. 1995 FORMULA STOCK OPTION PLAN 1996 EMPLOYEE INCENTIVE STOCK OPTION PLAN (Full Titles of the Plans) RICHARD M. SCRUSHY Copy to: Chairman of the Board and Chief Executive Officer WILLIAM W. HORTON, ESQ. HEALTHSOUTH Corporation Senior Vice President and Corporate Counsel One HealthSouth Parkway HEALTHSOUTH Corporation Birmingham, Alabama 35243 One HealthSouth Parkway (Name and address of agent for Service) Birmingham, Alabama 35243 (205) 967-7116 (205) 967-7116 (Telephone number, including area code, of agent for service)
Approximate date of commencement of proposed sale to the public: As soon as practicable after effective date of this Registration Statement. CALCULATION OF REGISTRATION FEE
=============================================================================================================== Title of Proposed Maximum Proposed Maximum Amount of Securities Amount to be Offering Price Aggregate Offering Registration to be Registered Registered (1) per Share (2) Price (2) Fee (2) - --------------------------------------------------------------------------------------------------------------- Common Stock, Par Value $.01 Per Share 943,188 shares N/A $9,386,625.70 $2,844.44 ===============================================================================================================
(1) The amount being registered represents authorized and unissued shares reserved for issuance upon the exercise of of options issued under the Plans and outstanding as of March 3, 1997, adjusted to give effect to a two-for-one split of the Common Stock of HEALTHSOUTH Corporation effected March 17, 1997. (2) In accordance with Rule 457(h) promulgated under the Securities Act of 1993, the maximum aggregate offering price and the registration fee are based on the aggregate exercise price of options outstanding under the Plans, which individual exercise prices range from $5.61 to $15.13 per share, after giving effect to the stock split described in footnote 1, above. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE There are hereby incorporated by reference in this Registration Statement, and specifically made a part hereof, the following documents heretofore filed by HEALTHSOUTH Corporation (the "Company" or "HEALTHSOUTH") with the Securities and Exchange Commission (the "Commission"), pursuant to the Securities Exchange Act of 1934 (the "Exchange Act"): 1. The Company's Annual Report on Form 10-K, as amended, for the fiscal year ended December 31, 1996. 2. The Company's Current Report on Form 8-K filed February 19, 1997 (relating to the merger with Horizon/CMS Healthcare Corporation). 3. The Company's Current Report on Form 8-K filed March 13, 1997 (relating to the consummation of the acquisition of Health Images, Inc.). 4. The description of the Company's capital stock contained in the Company's Registration Statement on Form 8-A filed August 26, 1989. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the effective date of this Registration Statement and prior to the filing of a post-effective amendment indicating that all the securities offered hereby have been sold, or deregistering all such securities then remaining unsold, shall be deemed to be incorporated by reference in this Registration Statement and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement. ITEM 4. DESCRIPTION OF SECURITIES. Not applicable. ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. Not applicable. II-1 ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 102(b)(7) of the Delaware General Corporation Law ("DGCL") grants corporations the right to limit or eliminate the personal liability of their directors in certain circumstances in accordance with provisions therein set forth. Article Nine of the HEALTHSOUTH Restated Certificate of Incorporation filed in the Office of the Secretary of the State of Delaware on March 13, 1997, contains a provision eliminating or limiting director liability to HEALTHSOUTH and its stockholders for monetary damages arising from acts or omissions in the director's capacity as a director. The provision does not, however, eliminate or limit the personal liability of a director (i) for any breach of such director's duty of loyalty to HEALTHSOUTH or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under the Delaware statutory provision making directors personally liable, under a negligence standard, for unlawful dividends or unlawful stock purchases or redemptions, or (iv) for any transaction from which the director derived an improper personal benefit. This provision offers persons who serve on the Board of Directors of HEALTHSOUTH protection against awards of monetary damages resulting from breaches of their duty of care (except as indicated above). As a result of this provision, the ability of HEALTHSOUTH or a stockholder thereof to successfully prosecute an action against a director for a breach of his duty of care is limited. However, the provision does not affect the availability of equitable remedies such as an injunction or rescission based upon a director's breach of his duty of care. The SEC has taken the position that the provision will have no effect on claims arising under the Federal securities laws. Section 145 of the DGCL grants corporations the right to indemnify their directors, officers, employees and agents in accordance with the provisions therein set forth. Article Nine of the HEALTHSOUTH Restated Certificate of Incorporation and Article IX of the HEALTHSOUTH Bylaws provide for mandatory indemnification rights, subject to limited exceptions, to any director, officer, employee, or agent of HEALTHSOUTH who, by reason of the fact that he or she is a director, officer, employee, or agent of HEALTHSOUTH, is involved in a legal proceeding of any nature. Such indemnification rights include reimbursement for expenses incurred by such director, officer, employee, or agent in advance of the final disposition of such proceeding in accordance with the applicable provisions of the DGCL. HEALTHSOUTH has entered into agreements with all of its directors and its executive officers pursuant to which HEALTHSOUTH has agreed to indemnify such directors and executive officers against liability incurred by them by reason of their services as a director or executive officer to the fullest extent allowable under applicable law. ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED. Not applicable. II-2 ITEM 8. EXHIBITS Exhibits (numbered in accordance with Item 601 of Regulation S-K) Exhibit No. Exhibit ----------- ------- 4(a) Form of Health Images, Inc. Non-Qualified Stock Option Plan, filed as Exhibit 10(d)(i) to Health Images, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1995, is hereby incorporated herein by reference. 4(b) Form of Amended and Restated Employee Incentive Stock Option Plan, as amended, of Health Images, Inc., filed as Exhibits 10(c)(i), 10(c)(ii), 10(c)(iii) and 10(c)(iv) to Health Images, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1995, is hereby incorporated herein by reference. 4(c) Form of Health Images, Inc. 1995 Formula Stock Option Plan, filed as Exhibit 10(d)(iv) to Health Images, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1995, is hereby incorporated herein by reference. 4(d) Form of 1996 Employee Incentive Stock Option Plan of Health Images, Inc. 5 Opinion of Haskell Slaughter & Young, L.L.C. 23 Consent of Ernst & Young L.L.P. 24 Powers of Attorney (See Signature Page). ITEM 9. UNDERTAKINGS. The undersigned Registrant hereby undertakes: 1. To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement (iii) to include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; 2. That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-3 3. To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a Director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such Director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Birmingham, State of Alabama, on April 2, 1997. HEALTHSOUTH Corporation By /s/ RICHARD M. SCRUSHY ------------------------ Richard M. Scrushy Chairman of the Board and Chief Executive Officer KNOW ALL MEN BY THESE PRESENTS, that each person whose name appears below constitutes and appoints Richard M. Scrushy and Aaron Beam, Jr., and each of them, his attorney-in-fact, with power of substitution for him or her in any and all capacities, to sign any amendments, supplements or other instruments he or she deems necessary or appropriate, and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact or his substitute may cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the date indicated. Signature Capacity Date --------- -------- ---- /s/ RICHARD M. SCRUSHY Chairman of the Board April 2, 1997 - ------------------------- and Chief Executive Officer (Richard M. Scrushy) and Director /s/ AARON BEAM, JR. Executive Vice President and April 2, 1997 - ------------------------- Chief Financial Officer (Aaron Beam, Jr.) (Principal Financial Officer) /s/ WILLIAM T. OWENS Senior Vice President and Controller April 2, 1997 - ------------------------- (Principal Accounting Officer) (William T. Owens) /s/ RICHARD F. CELESTE Director April 2, 1997 - ------------------------- (Richard F. Celeste) /s/ JOHN S. CHAMBERLIN Director April 2, 1997 - ------------------------- (John S. Chamberlin) /s/ C. SAGE GIVENS Director April 2, 1997 - ------------------------- (C. Sage Givens) /s/ CHARLES W. NEWHALL III Director April 2, 1997 - -------------------------- (Charles W. Newhall III) II-5 /s/ GEORGE H. STRONG Director April 2, 1997 - -------------------------- (George H. Strong /s/ PHILLIP C. WATKINS Director April 2, 1997 - -------------------------- (Phillip C. Watkins) /s/ JAMES P. BENNETT Director April 2, 1997 - -------------------------- (James P. Bennett) /s/ LARRY R. HOUSE Director April 2, 1997 - -------------------------- (Larry R. House) /s/ ANTHONEY J. TANNER Director April 2, 1997 - -------------------------- (Anthoney J. Tanner) /s/ P. DARYL BROWN Director April 2, 1997 - -------------------------- (P. Daryl Brown) /s/ JOEL C. GORDON Director April 2, 1997 - -------------------------- (Joel C. Gordon) /s/ RAYMOND J. DUNN, III Director April 2, 1997 - -------------------------- (Raymond J. Dunn, III) II-6 EX-4.4 2 EXHIBIT 4.4 1996 EMPLOYEE INCENTIVE STOCK OPTION PLAN HEALTH IMAGES, INC. 1. Purpose. This Employee Incentive Stock Option Plan (the "Plan") is intended as an incentive and to encourage stock ownership by certain officers and other key employees of Health Images, Inc., a Delaware corporation (the "Corporation"), or of its subsidiary corporations as that term is defined in Section 425(f) of the Internal Revenue Code of 1986, as amended (the "Subsidiary" or "Subsidiaries"), so that they may acquire or increase their proprietary interest in the Corporation, and properly reward them for meritorious or profit producing services to the Corporation or the Subsidiaries. It is further intended that options issued pursuant to this Plan shall constitute incentive stock options within the meaning of Sec. 422A of the Internal Revenue Code of 1986, as amended (the "Code"). 2. Administration. The Plan shall be administered by a committee appointed by the Board of Directors of the Corporation (the "Committee"). The Corporation's Compensation Committee shall administer the Plan. The Committee shall consist of not less than three members. The Board of Directors may from time to time remove members from or add members to the Committee. Vacancies on the Committee, howsoever caused, shall be filled by the Board of Directors. The Committee shall select one of its members as Chairman and shall hold meetings at such times and places as it may determine. The action of a majority of the Committee at a meeting at which a quorum is present, or acts reduced to or approved in writing by a majority of the members of the Committee, shall be the valid acts of the Committee. Each Director while a member of the Committee shall meet the definition of "disinterested person" contained in Rule 16b-3 of the Securities and Exchange Commission. The Committee shall from time to time at its discretion designate the key employees who shall be granted options and the number of shares to be optioned to each. The interpretation and construction by the Committee of any provisions of the Plan or of any option granted under it shall be final. No member of the Board of Directors or the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any option granted under it. 3. Eligibility. The persons who shall be eligible to receive options shall be such employees (including officers, whether or not they are Directors) of the Corporation or its Subsidiaries as the Committee shall select from time to time ("Optionee" or "Optionees"). An Optionee may hold more than one option, but only on the terms and subject to the restrictions hereafter set forth. 4. Stock. The stock subject to the options shall be shares of the Corporation's authorized and unissued or reacquired $.01 par value voting common stock (the term "shares" as used herein shall refer to shares which are specifically subject to an option granted under the Plan). The aggregate number of shares which may be issued under options pursuant to the Plan shall not exceed 500,000 shares. The limitations established by each of the preceding sentences shall be subject to adjustment as provided in Section 6(i) of the Plan. In the event that any outstanding option under the Plan for any reason expires or is terminated, the Shares allocable to the unexercised portion of such option may again be subjected to an option under the Plan. 5. Annual Limitation. The maximum number of shares of Common Stock with respect to which options may be granted during any fiscal year of the Company to any eligible optionee who is a "covered employee" within the meaning of Section 162(m) of the Internal Revenue Code shall not exceed 100,000 shares. 6. Terms and Conditions of Option. Options granted pursuant to the Plan shall be authorized by the Committee and shall be evidenced by agreements in such form as the Committee shall from time to time approve, which agreement shall contain specifically or be subject to the following terms and conditions: (a) Number of Shares. Each option shall state the number of Shares to which it pertains. (b) Option Price. Each option shall state the option price, which shall not be less than 100% of the fair market value of the Shares subject to the option on the date of grant. Fair market value shall be determined under the principles of Treasury Regulations 20.2031-2 or such other regulations or authorities as the Committee shall deem appropriate at the time. Subject to the foregoing, the Committee, in fixing the option price, shall have full authority and discretion and be fully protected in doing so. (c) Medium and Time of Payment. The option price shall be payable on the exercise of the option and may be paid (i) in United States Dollars in cash or by check; (ii) by transferring a number of shares, valued as provided in Paragraph 6(b) above, as of the date of transfer; having a value equal the option price; or (iii) by part payment in cash or by check as provided in (i) above and by payment of the balance by transferring shares to the Corporation as provided in (ii) above; (d) Conditions of Exercise of Options. (1) No option granted pursuant to this Plan shall be exercised in whole or in part more than ten years after it is -2- granted, and such option shall be subject to such further terms and conditions as to the time of its exercise as the Committee may prescribe. (2) In order to exercise an option granted hereunder, in whole or in part, each of the following conditions must be fulfilled at the time of exercise: (i) The Optionee must be in the employ of the Corporation or one of its Subsidiaries or exercise the Option within the 30 day period following termination of employment. However, an Optionee who is totally and permanently disabled at the time-of exercise of an option and who has ceased to work for the Corporation or one of its Subsidiaries as a result of such disability shall not be required to satisfy this condition if he has been employed by the Corporation or one of its subsidiaries within one year prior to the date of exercise of such option. Permanent and total disability for purposes of this Paragraph 6 (d) (2) (i) shall mean that such Optionee, at the time he ceased his employment by the Corporation, was unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment which could be expected to result in death or which at such time could be expected to last for a continuous period of not less than twelve (12) months. Such optionee shall furnish proof of such disability in form and substance satisfactory to the Committee. Neither the transfer of an employee from employment by one of the Corporation's Subsidiaries to another Subsidiary, the transfer of an employee from the employment by one the Subsidiaries to the Corporation or by the Corporation to one of its Subsidiaries shall be deemed the termination of the employment of the employee by the Corporation or any of its Subsidiaries. (ii) The Optionee shall have met any additional specific conditions imposed by the Committee at the time of the granting of the option. Such specific conditions may be in the form of achievement goals for the individual Optionee based upon predetermined minimum increases over a specific period or periods time, in sales, gross profits, pre-tax or after tax earnings, productivity, or other goals or standards for the Corporation or the Subsidiary for which the Optionee works. The imposition of such achievement goals and conditions shall be in the sole discretion of the Committee; and such goals and conditions may differ between individual employees of the Corporation and/or of its Subsidiaries; and between classes of employees of the - 3 - Corporation and/or any Subsidiary; and between the employees of the Corporation, as a class, and the employees of the Subsidiaries as a class. (iii) Any Optionee of the Corporation or any Subsidiary shall be entitled to accumulate and carry over any unexercised portion of an option to any subsequent period, provided that at the time of exercise of such portion of the option, the Optionee shall meet all conditions herein required of the Optionee at the time of the exercise. (e) Termination of Employment Except by Death. Subject to Paragraph 6 (d) (2) (i), in the event that an Optionee shall cease to be employed by the Corporation or any of its Subsidiaries for any reason other than his death and shall be no longer in the employ of any of them, such Optionee shall have thirty (30) days from the date of termination of employment to exercise the unexercised portion of the option after which such portion of the absence or absence for military or governmental service shall constitute termination of employment, for the purposes of the Plan, shall be determined by the Committee, whose determination shall be final and conclusive. (f) Death of Optionee and Transfer of Option. If the Optionee shall die while in the employ of the Corporation or a Subsidiary and shall not have fully exercised the option, the option may be exercised, subject to the condition that no option shall be exercisable after the expiration of ten years from the date it is granted, to the extent that the Optionee's right to exercise such option had accrued pursuant to this Section 6 of the Plan at the time of his death and had not previously been exercised, at any time within twelve months after the Optionee's death, by the executors or administrators of the Optionee or by any person or persons who shall have acquired the option directly from the optionee by bequest or inheritance. No option shall be transferable by the Optionee otherwise than by will or under the laws of descent and distribution. (g) Recapitalization. Subject to any required action by the shareholders, the number of shares covered by each outstanding option, and the price per Share thereof in each such option, shall be proportionately adjusted for any increase or decrease in the number of issued shares of the Corporation resulting from a subdivision or consolidation of shares or the payment of a stock dividend or stock split (but only on the shares) or any other increase or decrease in the number of such shares affected without receipt of consideration by the Corporation. - 4 - Subject to any required action by the shareholders, if the Corporation shall be the surviving corporation in any merger or consolidation, each outstanding option shall pertain to and apply to the securities to which a holder of the number of shares subject to the option would have been entitled. A dissolution or liquidation of the Corporation or a merger or consolidation in which the Corporation is not the surviving corporation, shall cause each outstanding option to terminate. In the event of a change in the shares of the Corporation as presently constituted, which is limited to a change of all of its authorized shares without par value into the same number of shares with a different stated value or with par value, the shares resulting from any such change shall be deemed to be the shares within the meaning of the Plan. To the extent that the foregoing adjustments relate to stock or securities of the Corporation, such adjustments shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive, provided that each option granted pursuant to this Plan shall not be adjusted in a manner that causes the option to fail to continue to qualify as an incentive stock option within the meaning of Sec. 422A of the Code. Subject to any required action by the shareholders, if the Corporation is a party to any merger, consolidation or other change in control of the Corporation, each outstanding option shall vest in full at the time of such merger, consolidation or change in control. Each option shall then pertain to and apply to the securities of the Corporation, or in a case where the Corporation is not the surviving corporation, in the successor corporation to the Corporation to which a holder of the number of shares subject to the option would have been entitled. Except as hereinbefore expressly provided in this Section 6, the Optionee shall have no rights by reason of any subdivision or consolidation of shares of stock of any class or the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class or by reason of any dissolution, liquidation, merger, or consolidation or spinoff of assets or stock of another corporation, and any issue by the Corporation of shares of stock or any class, or securities convertible into shares of stock or any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares subject to the option. The grant of any option pursuant to the Plan shall not affect in any way the right or power of the Corporation to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge or to consolidate or to dissolve, liquidate or sell, or transfer all or any part of its business or assets; provided, however, that if any such - 5 - adjustment shall result in a fractional share for any Optionee under any option hereunder, such fraction shall be completely disregarded and the Optionee shall only be entitled to the whole number of shares resulting from such adjustment. (h) Rights as a Shareholder. An Optionee or a transferee of an option shall have no rights as a shareholder with respect to any shares covered by his option until the date of the issuance of a stock certificate to him for such shares. No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions or other rights for which the record date is prior to the date such stock certificate is issued, except as otherwise provided in this Section 6. (i) Investment Purpose. The Company shall not be obligated to sell or issue any shares pursuant to any option unless the shares with respect to which the option is being exercised are at that time effectively registered or exempt from registration under the Securities Act of 1933, as amended. Notwithstanding anything in the Plan to the contrary, each option under the Plan shall be granted on the condition that the purchases of shares thereunder shall be for investment purposes, and not with a view to resale or distribution except that in the event the shares subject to such option are registered under the Securities Act of 1933, as amended, and applicable state securities laws or in the event a resale of such shares without such registration would otherwise be permissible, such condition shall be inoperative if in the opinion of counsel for the Corporation such condition is not required under the Securities Act of 1933 or any other applicable law, regulation, or rule of any governmental agency. (j) Other Provisions. Options authorized under the Plan shall contain such other provisions, including, without limitation, restrictions upon the exercise of the option, as the Committee or the Board of Directors of the Corporation shall deem advisable subject to any limitation on the discretion of the Board of Directors required by Rule 16B-3. Any such option agreement shall contain such limitations and restrictions upon the exercise of the option as shall be necessary in order that such option will be an Incentive Stock Option as defined in Sec. 422A of the Code or to conform to any change in the law and shall not contain any provisions, restrictions or limitations which shall prevent such option from being an Incentive Stock Option as aforesaid. 7. Term of Plan. Options may be granted pursuant to the Plan from time to time within a period of ten years from the date the Plan is adopted or the date the Plan is approved by the shareholders, whichever is earlier. - 6 - 8. Indemnification of Committee. In addition to such other rights of indemnification as they may have as Directors or as members of the Committee, the members of the Committee shall be indemnified by the Corporation against the reasonable expenses, including attorneys' fees actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any option granted thereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by the independent legal counsel selected by the Corporation) or paid by them in satisfaction of a judgment in any such action, a suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such Committee member is liable for negligence or misconduct in the performance of his duties; provided that within sixty (60) days after institution of any such action, suit or proceeding a Committee member shall in writing offer the Corporation the opportunity, at its own expense, to handle and defend the same. 9. Amendment to the Plan. The Board of Directors of the Corporation may, insofar as permitted by law, from time to time, with respect to any shares at the time not subject to options, suspend or discontinue the Plan or revise or amend it in any respect whatsoever except that, without approval of the shareholders, no such revision or amendment shall change the number of shares subject to the Plan, change the designation of the class of employees eligible to receive options, decrease the price at which options may be granted, remove the administration of the Plan from the Committee, or render any member of the Committee eligible to receive an option under the Plan while serving thereon. Furthermore, the Plan may not, without the approval of the shareholders, be amended in any manner that will cause options issued under it to fail to meet the requirements of Incentive Stock Options as defined in Sec. 422A of the Code. 10. Application of Funds. The proceeds received by the Corporation from the sale of Shares pursuant to options will be used for general corporate purposes. 11. No Obligation to Exercise Option. The granting of an option shall impose no obligation upon the Optionee to exercise such option. 12. Approval of Shareholders. The Plan shall not take effect until approved by the holders of a majority of the outstanding shares which approval must occur within the period beginning twelve months before and ending twelve months after the date the Plan is adopted by the Board of Directors. - 7 - 13. Limitations on Grant of Option. No option may be granted under this Plan to any person who owns, directly or indirectly under the rules of Section 425(d) of the Code, or who, by reason of the exercise of such option will own more than ten (10%) percent of the total combined voting power of all classes of stock of the Corporation, its parent or subsidiary, as provided in Section 422A(b)(6) of the Code, unless such option (i) has an exercise price that equals at least 110% of the fair market value of the stock on the date the option is granted, and (ii) shall not be exercisable more than five years from the date the option is granted. - 8 - EX-5 3 EXHIBIT 5 Exhibit 5 Haskell Slaughter & Young, L.L.C. 1200 AmSouth/Harbert Plaza 1901 Sixth Avenue North Birmingham, Alabama 35203 April 2, 1997 HEALTHSOUTH Corporation One HealthSouth Parkway Birmingham, Alabama 35243 Re: Registration Statement on Form S-8 -- Health Images, Inc. Non-Qualified Stock Option Plan Amended and Restated Employee Incentive Stock Option Plan Health Images, Inc. 1995 Formula Stock Option Plan 1996 Employee Incentive Stock Option Plan Gentlemen: We have served as counsel for HEALTHSOUTH Corporation, a Delaware corporation (the "Company"), in connection with the registration under the Securities Act of 1933, as amended, of an aggregate of 943,188 shares (the "Shares") of the Company's authorized Common Stock, par value $.01 per share, to be issued to participants of Health Images, Inc.'s Non-Qualified Stock Option Plan, Amended and Restated Employee Incentive Stock Option Plan, 1995 Formula Stock Option Plan and 1996 Employee Incentive Stock Option Plan (the "Plans"), pursuant to the Company's Registration Statement on Form S-8 relating thereto (the "Registration Statement"). This opinion is furnished to you pursuant to the requirements of Form S-8. In connection with this opinion, we have examined and are familiar with originals or copies (certified or otherwise identified to our satisfaction) of such documents, corporate records and other instruments relating to the incorporation of the Company and to the authorization and issuance of the Shares as we have deemed necessary and appropriate. Based upon the foregoing, and having regard for such legal considerations we have deemed relevant, it is our opinion that: 1. The Shares have been duly authorized. HEALTHSOUTH Corporation April 2, 1997 Page 2 2. Upon issuance, sale and delivery of the Shares as contemplated in the Registration Statement and the Plans, the Shares will be legally issued, fully paid and nonassessable. We hereby consent to the filing of this opinion as an Exhibit to the Registration Statement. Very truly yours, HASKELL SLAUGHTER & YOUNG, L.L.C. By /s/ MARK EZELL ---------------------------- Mark Ezell EX-23 4 EXHIBIT 23 Consent of Ernst & Young LLP, Independent Auditors We consent to the incorporation by reference in the Registration Statement (Form S-8) pertaining to the Health Images, Inc. Non-Qualified Stock Option Plan, the Health Images, Inc. 1987 Employee Incentive Stock Option Plan, the Health Images, Inc. 1995 Formula Stock Option Plan and the Health Images, Inc. 1996 Employee Incentive Stock Option Plan of our report dated February 24, 1997 except for the first paragraph of Note 15, as to which the date is March 12, 1997, with respect to the consolidated financial statements and schedule of HEALTHSOUTH Corporation included in its Annual Report (Form 10-K) for the year ended December 31, 1996, filed with the Securitites and Exchange Commission. ERNST & YOUNG LLP Birmingham, Alabama March 28, 1997 -----END PRIVACY-ENHANCED MESSAGE-----